February 1, 2013

Dear Frannie Friday--Budgeting

My first suggestion for a Dear Frannie question came from a very dear reader indeed.  Since reading my post on some changes to expect on the blog and talking about how I was going to budget for a new camera, she asked me to discuss budgeting. 

I should preface this post by disclosing that I am by no means a budgeting expert.  In fact, I am only a budgeting beginner.  But I have learned a few tricks that I hope will help you to reach some goals that you may have.

Tip #1:  Get organized.  Patrick is excellent at budgeting.  The first thing we did was make a spreadsheet of every bill we had and how much each bill was.  For those that varied, we found out the average and plugged that number in.  We have a separate bank account that is purely for bills.  A portion of each of our checks goes into that account for bills.  We do not touch that account.  And we set up automatic bill pay for each of the bills that we could.  No more late charges, no more bounced checks, no more forgetting to pay bills.  This has saved me tremendous headache and financial strain in and of itself.  Also, make sure to check in on your accounts regularly.  Ultimately, it is good to keep a check registry and input every purchase into it.  That way you can get an average per month on what you spend on non-bills but regular purchases like groceries, gas, coffee, lunches, etc.

Tip #2: Get rid of credit card debt.  I know, I know.  This is much easier said than done.  And ever since I was 18 I had a credit card.  And I used it.  But, as I am sure you are aware, using a credit card for purchases is not ideal.  Not only do you have that extra lingering bill every month, but you get charged interest and some have annual fees.  If you can't pay off your credit card right away, definitely try to consolidate.  Pay off the debt with the highest interest rate first, even if it is the highest balance.  And/or transfer all the balances you can to a card with a lower interest rate and no annual fee.  This will give you so much freedom.  And not only that, but when you don't have credit cards to use any more, you are much more cognitive about your purchases before you make them.  

Tip #3: Pay yourself.  My Mother in law actually took a budgeting class and has been a budgeting rock star ever since.  The first lesson that her instructor told her class was that the first goal to give yourself was to take a certain amount every month and give it to yourself.  The reason being is that people who don't budget very well get really freaked out and stressed out about money and bills.  And then they tend to give up or give in to purchases for themselves here and there that are not in their budget.  And then everything goes down the drain.  Give yourself an allowance.  Reward yourself for your hard work.  But stick to it.

Tip #4: Save, save, save.  Putting a certain amount of what you earn into a savings account can work wonders.  Nothing screws with a budget more than having a car that all of a sudden needs work or a kid that ends up needing stitches or a washing machine dying.  Money in savings accounts add up in interest and not only that, when you need money for those situations, it's right there.  No need to cut into money you have otherwise saved for bills.

That's all I've learned so far.  Like I said, I'm no expert, but these seemingly small tips really do make a big difference.  I used to think I was living dirt poor before Patrick taught me how to budget.  Turns out, I make decent money, I just wasn't using it correctly.  Now I have a goal in mind for my money.  My next challenge is the constant hand slap and self control to say no to leopard coats on sale for $41 at Asos (hey, someone's gotta benefit from it) so that I can enjoy a brand new camera down the road.

Do you have a question for me for the next Dear Frannie Friday?  Shoot me an email at franniepantz@hotmail.com

Red Jeans-vintage; Striped Peplum Top-Khol's; Striped Wedges-Payless; Belt-Kohl's; Bracelets-vintage from Grandma, Kohl's, gifted

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